Central Bank of Russia cuts key rate by 25 bps to 14.00%

The Bank of Russia cut its key rate by 25 basis points to 14.00% per annum, saying the economy was growing at a moderate pace and that strong summer price growth and higher inflation expectations were mainly linked to one-off factors, but that temporary declines in production capacities in some sectors and a more expansionary three-year fiscal path than projected in April required a smoother easing cycle. The move followed a 25 bp cut in June and 50 bp cuts in February, March and April, which had lowered the rate from 16.00% in December 2025 to 14.25%. Annual inflation stood at 5.9% as of 20 July, and the central bank now forecasts 2026 inflation at 6.0–7.0% because of higher fuel prices before inflation stays on target from 2027, while revising its 2026 GDP growth forecast down to 0.0–1.0% as consumer demand drove only moderate second-quarter growth and labour market tightness eased gradually, although unemployment remained at record lows. Monetary conditions were assessed as moderately tight, non-price lending conditions remained tight, and lending growth decelerated slightly in June. The central bank said proinflationary risks still outweigh disinflationary ones, including a weaker global outlook and rising global price pressures amid geopolitical tensions, and reiterated that future rate decisions will depend on inflation, inflation expectations and domestic and external risks, with a higher structural primary budget deficit than assumed in its July baseline potentially r